How does Stress Relate to Success?
Last year, I had the pleasure and privilege of attending a fund manager conference where Ceri Evans spoke. At the time, I had no idea who Ceri Evans was. Ceri Evans was Richie McCaws mental skills coach from just before the 2011 rugby world cup.
Ceri started his session by asking us to do a few tasks. Firstly, he asked the audience to turn to their partner and stare into each others eyes without talking. The audience was collectively thinking what the…
He then asked all of us who wants to be successful, I think all of the audience put their hands up. He then pronounced this what he expected. Then he went on to ask who felt uncomfortable when I asked you to stare into your neighbours eyes. To which most participants put their hands up. He said you all handled it differently, I could see from looking around the room. Some of you chatted, some of you played with something, some of you refused to do it. How many of you felt comfortable doing that? How many of you like stress? To which no one responded affirmatively.
He explained that there was a point to the exercise. Most participants want to be successful. However, no one enjoys stress or feeling uncomfortable. He explained that unfortunately you can’t have one without the other. Success involves taking yourself outside your comfort zone and learning how to manage your self, your emotions and what you can control. As people did when he asked us all to stare into each others eyes. Some people just didn’t participate. This is what he spent his time teaching Richie Mccaw and the all blacks how to do. He explained the same principals can be applied off the sports field.
Often, we put ourselves into situations that take us outside our comfort zones. Whether it be on the sports field, in business, our personal lives or with our investing. They all involve risk, reward and failure. This brings me to investments.
I have spoken to a number of potential investors recently that are disappointed with the returns they are receiving from term deposits and savings. I feel for them. After tax, and inflation, they are effectively getting nothing. Some rely on that for income. They want higher returns but not the volatility (risk) that goes with it. Some do but want to wait until the markets settle down post the pandemic.
The thing is, there is always something that will be creating volatility around the globe. Diversification generally helps reduce that. However, events happen like the GFC and the Pandemic that impact all markets. Generally, no one can predict these shocks, and you never know how long they will last for. To avoid all volatility, you need to stay out of the market, stay in your comfort zone, wrapped in your term deposit comfort blanket. That equates to pretty poor returns. However, waiting until the markets are performing consistently is not a good strategy. Why? Because returns are historic. Chances are, if you invest because you believe markets are steady and returns for a particular investment have been good, you have missed them.
You have to be in the markets when they are performing badly to pick up the positive returns. The longer you are in the market the more positive returns you are likely to receive. Market gains are not evenly spread.
So how do you get past this fear of stepping outside your comfort zone? As Ceri coached Richie Mccaw to, you focus on what you can control. In the investment world, that’s your investment strategy, and getting an independent view of it (yes that’s a plug for us!). That involves understanding your risk profile, understanding your investment timeframes (to invest in shares they really need to be long term) and learning to control your emotions when the markets tank. Cause they will. Then they usually recover, and then they will do it all over again. These elements are crucial.
With that, I’ll leave you to focus on taking some stress out of your lives over the Christmas and New Years period. We hope you get a chance to relax, have some fun, hang with family and friends and soak up some sunshine. We will be! It’s been a crazy and busy year so we are going to close the doors on Friday the 18th of December and reopen on Monday the 11th of Jan. We’ll have some exciting news to share in the new year too!!
Disclaimer: This newsletter is meant to be informative and engaging, hopefully not a cure for insomnia. Please don’t take this as personalised financial advice. Discuss your situation with an Advisor. This is where I need to say past returns are no guarantee of future returns.
- Posted by Isbister
- On December 8, 2020